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Spring’s Blooming Int’l Equity Markets (2017)

Spring has arrived and our home town Chicago baseball teams (Cubs & White Sox) lead their respective Central Divisions. Likewise the Chinese and Emerging equity markets have also taken an early lead in the global economic recovery this year.

On April 18, 2017 IMF delivered their World Economic Outlook, a report which raised the global economic outlook in 2017 to 3.5% and 3.6% in 2018 citing “Stronger activity and expectations of more robust global demand…” Their outlook for the U.S. economy was left at 2.3% for 2017.

With the S&P 500 bullish run in its 8th year may be slowing down +6.64% (y-t-d). Outside of the U.S., the global recovery is growing stronger as reflected by FTSE China 50 +10.92% and FTSE Emerging+12.20% in 2017.

30-day Implied Volatilities

The VIX Index measuring the 30-day expectation of implied volatility currently indicates an expectation for a continued rally in the S&P 500 as it hovers near its year’s low at 10.74. In comparison, the volatility levels on the iShares Large-cap China ETF (VXFXI) and the MSCI Emerging ETF (VXEEM) have both declined by over -30% since the beginning of the year and also reaching their respective lows for the year as seen in the chart below.

FTSE China 50 and FTSE Emerging Cash-settled Index Options:

Using options strategies can be a great way to capture upward price movement with limited downside risk.

The cash-settled index options on FTSE China 50 and FTSE Emerging are listed and trade exclusively on CBOE:

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